Committee
Finance Committee 24 February 2016
24 Feb 2016 · S4 · Finance Committee
Item of business
Fiscal Framework
Models are generally inelegant, because there is always discussion and agreement—or compromise—is there not? I want to ask about the £600 million, which you said was for economic shocks and forecasting errors. You talked about £300 million, but is it £600 million in total if there was an economic shock, or is it—Interruption. I am sorry—I am trying to think out loud here. If there are no forecast errors, will you be able to spend all the £600 million on an economic shock?
In the same item of business
The Convener
SNP
Agenda item 2 is to take evidence on Scotland’s fiscal framework. Regrettably, the Chief Secretary to the Treasury declined our invitation to appear before t...
The Deputy First Minister and Cabinet Secretary for Finance, Constitution and Economy (John Swinney)
SNP
I am grateful to the members of the Finance Committee for their work to date on examining the proposals for a fiscal framework, and in light of yesterday’s a...
The Convener
SNP
Thank you very much for that opening statement. We are all delighted that an agreement has been reached. You talked about a number of areas and made it quit...
John Swinney
SNP
Obviously, the Scottish Government advanced particular propositions in the negotiation process when we were trying to secure the agreement. For example, I ar...
The Convener
SNP
Thank you. Prudential borrowing will not be one of the aspects of the framework, will it?
John Swinney
SNP
No, it will not be. An aggregate limit of £3 billion will be set on borrowing, which is an increase from the £2.2 billion that the Calman commission proposed...
The Convener
SNP
You have talked a lot about the fact that Scotland will not suffer detriment to the tune of one penny, but a number of issues that have come out over the pas...
John Swinney
SNP
I will separate those issues out after I make a preliminary remark. My comments in relation to the exercise of the no-detriment principle relate to the block...
The Convener
SNP
How realistic is that settlement in terms of the ability to deliver the programmes?
John Swinney
SNP
The Department for Work and Pensions estimate for the set-up of equivalent systems in Scotland was £350 million. We have secured more than half of that capit...
The Convener
SNP
How realistic is the £66 million in terms of the ability to deliver?
John Swinney
SNP
The DWP estimate of the cost of administering the systems in Scotland was £60 million, with a marginal saving of an additional £12 million. As is customary i...
The Convener
SNP
So the Scottish Government is reasonably content. Given that your borrowing is going up to £450 million, I think that you take the view that you will be able...
John Swinney
SNP
I will come at that from the point of view that I do not believe that it is a given that it has to cost us more than £200 million.
The Convener
SNP
You just said that it would be £400 million—
John Swinney
SNP
That was the estimate that we had, but that does not necessarily mean that we have to spend that. The way in which I will take forward those priorities, if I...
The Convener
SNP
One of the issues in our report on the fiscal framework was moral hazard. We said that moral hazard needs to be explicitly addressed in the fiscal framework....
John Swinney
We are not at the conclusion of the drafting of the heads of agreement. I will certainly reflect on that point as we look at the finalisation of the heads of...
The Convener
SNP
That is fine. A lot of members want to come in with questions. We will start with Gavin Brown, who will be followed by Mark McDonald.
Gavin Brown
Con
Cabinet secretary, I am pleased that you have been able to give a bit more detail than I had expected this morning. I want to probe some of it. You have outl...
John Swinney
SNP
They cannot take effect until the Scotland Bill receives royal assent, at the very least, which I do not imagine will happen before 1 April. If Mr Brown give...
Gavin Brown
Con
You mentioned a number of limits but I was scribbling quite furiously at the time and I want to make sure that I have taken them down correctly. You said tha...
John Swinney
SNP
If it helps, convener, I am happy to provide a note to the committee. Indeed, I said earlier that a note will be provided.
The Convener
SNP
The information will also be in the Official Report.
Gavin Brown
Con
So the limit is £300 million per annum for forecast errors.
John Swinney
SNP
That is correct.
Gavin Brown
Con
You also mentioned £600 million. Is that for economic shocks?
John Swinney
SNP
It is the combined figure for forecast errors and economic shock.
Gavin Brown
Con
So it includes the £300 million.
John Swinney
SNP
The £300 million is a subset of the £600 million.